Under a short-term, one-time deal, 8,000 laborers, truck drivers, plumbers, electricians and other union trade workers for the City of Chicago have agreed to take one unpaid furlough day this quarter, saving the city $2 million and forestalling city layoffs of about 800 employees until next month.
The pact was struck to buy time in hopes that the Illinois General Assembly will pass an early retirement package this month that is designed to lure workers off the payrolls voluntarily, averting the need for pink slips. The pension sweetener package failed in the fall veto session, when it required a three-fifths majority. Now it will require only a simple majority.
The legislature, though, needs to give this deal intense scrutiny. The assumption in Springfield has long been that pension sweeteners carry no real cost. And that’s one reason why several pension plans in the state are in deep trouble, burdened by huge and rapidly growing obligations.
The pension bill for Chicago municipal, laborers and park district employees would allow employees to buy the right to retire five years early. All told, it would add an estimated $350 million in pension liabilities.
The three pension plans for these workers are well-funded and could absorb the new obligation. The laborers’ fund actually has more assets than liabilities. The least well off is the municipal fund, which nevertheless has assets to cover 84 percent of its liabilities.
The police pension plan, though, is only 50 percent funded and the fire pension is at 43 percent, according to state figures. A 2003 Wilshire Associates report on 78 city and county pension plans ranked the Chicago’s police and fire plans among the nation’s worst for carrying liabilities far in excess of assets.
Chicago has no business burdening those plans with more obligations. Yet the bill will hike the fire plan liabilities by $146 million. The police tab has not been calculated, but state analysts say it will be “substantial.”
Chicago’s 2004 budget seeks to staunch red ink by eliminating 1,400 positions. Still to be resolved is how the city will get not just a smaller workforce, but a more efficient workforce.
Focusing on the operations of city work crews makes sense. They’re inefficient relative to their private sector counterparts, who often belong to the very same unions.
A foreman supervising a water crew does no work other than to supervise the crew. In the private sector, foremen usually roll up their sleeves and work while running the site. Similarly, city drivers who take road construction crews to work sites sit in the cab while the work’s being done. That’s because, well, they’re the drivers.
And city union workers collect time-and-a-half wages on Saturdays, and double-time on Sundays, regardless of whether they worked a 40-hour week. In the outside world, overtime pay usually means you work overtime.
There’s plenty of room for the city to get more efficient. At a time of layoffs and budget cutbacks, Springfield and City Hall should follow the first rule of holes, and stop digging.
